May 11, 2011

In Robert Reich's Aftershock: The Next Economy and America's Future, the author makes some interesting points. He sees the static or dwindling share of income for middle class and low income Americans to be a driving force behind the nation's economic problems. Since the late 1970s, incomes have been pretty much stuck for all but the wealthiest Americans.

Those outside of that happy circle had to cope as best they could with a changed reality that included a minimum wage that didn't keep up with the cost of living; assaults on unions; tax cuts for the wealthiest; shifting budget priorities; etc.

People coped as best they could as they tried to make up for stagnant incomes. Coping mechanisms included:

*working longer hours. By the early years of this century, the average American family worked 350 hours more than the average European--and they worked 500 hours more than they did in 1979. You can max out there pretty easily too, assuming you can find work.

*drawing down savings and borrowing heavily. That didn't work out too well and isn't much of an option now.

Given the skewed priorities of those driving the agenda in Washington, things are likely to get worse, minus the coping mechanisms.

GOVERNMENT BY PEOPLE WHO HATE YOU, CONTINUED. The House Republican plan to block grant Medicaid and related proposals (including the budget cap supported by WV's Joe Manchin) is going to hit seniors hardest of all. Seventy percent of people in nursing homes rely on Medicaid since even middle class families run through savings and assets quickly in such circumstances.

May 10, 2011

There is a school of thought when it comes to writing that the goal is to make things so clear that one could explain it to a grandparent who was unfamiliar with the issue.

As an exercise, here's how I'd explain the current deficit/federal budget debate to one of mine (if any were still around).

Why do we have big deficits?

1. Because of the Bush tax cuts, which went disproportionally to the wealthy. (Solution: end them, or some of them anyhow);

2. Because of the wars, including particularly the Bush administration's war of choice in Iraq. (Solution: see above, minus the qualifiers.)

3. Because of the recession. For one thing, when the economy tanks, so do tax revenues. Also, various social programs--such as food stamps, unemployment insurance, and Medicaid--are designed to go up when the economy goes down while they help people get through the recession.

The Recovery Act and TARP were temporary programs designed to end the worst downturn since the Great Depression. And they kind of did, at least as far as helping the economy to grow again. We would probably be in better shape as far as jobs and economic growth go if the Recovery Act would have been bigger or more targeted to direct job creation.

4. Because of the rising cost of health care. The Affordable Care Act has provisions that will help in this, but more needs to be done. Republican plans to gut Medicare, Medicaid and CHIP would do nothing to address health care costs--they'd just pass them on to consumers.

One more question: Why did we have the recession? My short answer is that we owe it to a lack of regulation in the finance sector of the economy. And the big dogs on Wall Street are the same drunk drivers asking to borrow the car keys again.

Final thoughts: seniors on Medicare aren't the problem. Nor are elderly or disable people or children on Medicaid. Nor are college students who receive Pell grants. Nor are families who rely on food stamps to get by. They didn't cause it and they shouldn't bear the brunt of dealing with it.